AO.com and Marks Electrical improve golden-quarter profit expectations

AO has increased profit expectations, despite a 17.2% decline in sales in the third quarter to December 31 at its core UK business, which it said was in line with management expectations. Marks Electrical’s sales surged 33.4% in its third quarter to the same date, and were ahead 22% in the year so far.

AO said in an unscheduled update that “actions taken to reduce costs and improve margins are gaining traction and profitability is now running ahead of our previous expectations”. 

AO now anticipates adjusted EBITDA will come in between £30m-£40m, ahead of previous guidance of £20m-£30m.

Marks Electrical reported that its performance was especially strong on energy-efficient products as consumers seek to navigate the cost-of-living crisis.

Founder Mark Smithson said the performance “demonstrates the resilience of our business model and the attractiveness of our market-leading customer offering, which more people are discovering”.

He said: “To continue our focus on growing brand awareness, we further invested in highly targeted television, radio and out-of-home campaigns over the Black Friday and Christmas sales peaks. This led to increased website traffic and broad-based revenue growth across the UK, but with particularly strong improvements year on year in London, the South East and East Midlands.

“We’ve worked closely with our suppliers throughout the quarter, enhancing our position as a growing, but agile, national retail partner of choice. As supply has stabilised during the last 12 months, we have been able to capitalise on our strong net cash position to enhance our inventory range and product availability, further improving our offering for customers.

“After an improvement in profitability in the third quarter, we look forward to maintaining our performance management discipline on revenue, profit and cash in order to achieve our full-year targets and continue to demonstrate our differentiated proposition.”

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